DTN Midday Livestock Comments

GENERAL COMMENTS:

Strong follow-through gains have quickly flooded into the lean hog futures complex. This continues to drive buyers to push for triple digit gains with prices moving more than $2 per cwt higher. Moderate losses are seen in cattle futures, although trade remains light. Corn prices are lower light trade. December corn futures are 1 cent lower. Stock markets are higher in light trade. The Dow Jones is 92 points higher while Nasdaq is up 8 points.

LIVE CATTLE:

Early cattle futures remained mixed in a narrow trading range. The lack of support in the complex continues to be pulled back following the aggressive triple digit gains seen Tuesday. Even though losses have expanded through the morning, traders remain generally on the sidelines, likely limiting overall trade pressure through midweek. Contract spreading is also being done between cattle and hog markets given the aggressive market support in the hog complex over the last week. Cash cattle sales on the Fed Cattle Exchange Auction averaged $110.28 per cwt with 3,401 head selling. Price ranges were seen from $109 to $112 per cwt, which is as nearly $2 per cwt lower than last week's price levels. A few bids are seen in Texas through the morning with prices at $110 to $112 per cwt while the rest of the market remains silent. Asking prices remain at $115 to $116 in the South and $176 to $178 in the North. Beef cut-outs at midday are lower $0.93 lower (select) and down $0.98 per cwt (choice) with active movement of 111 total loads reported (57 loads of choice cuts, 26 loads of select cuts, 0 loads of trimmings, 27 loads of ground beef).

FEEDER CATTLE:

Moderate pressure is holding through the complex. This softness is creating concern that additional pressure may be seen through the entire cattle market, especially given the lack of support in cash cattle trade over the last couple of days. But so far, the moderate 30 to 50 cent losses seen in feeder cattle trade has been limited to short covering activity after triple digit gains seen Tuesday.

LEAN HOGS:

Sharp gains have continued to develop through lean hog futures trade with December contracts holding a $1.72 per cwt rally at midday following the aggressive move higher in cash and pork cutout values while February and April contracts have posted gains over $2 per cwt. This market support continues to drive widespread interest from both commercial and investment traders willing to flood the market following the continued move off of the market bottom over the last couple of months. Cash prices are higher on the National Direct morning cash hog report. The weighted average price gained $1.09 at $50.61 per cwt with the range from $44.00 to $52.50 on 6,295 head reported sold. Cash prices are higher on the Iowa Minnesota Direct morning cash hog report. The weighted average price added $1.38 per cwt to $51.58 per cwt with the range from $44.00 to $52.50 on 3,040 head reported sold. The National Pork Plant Report reported 200 loads selling with prices gaining $1.09 per cwt. Lean hog index for 12/5 is at $51.03 up $0.47 with a projected two-day index of $51.95 up $0.92.

Rick Kment can be reached at rick.kment@dtn.com

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